Investigator: Children’s hospital ex-hearing judge was untruthful

Patricia Petersen, the state insurance office’s top administrative-law judge suspended in May over a messy set of dueling allegations, was misleading and untruthful in her characterizations of events surrounding a high-profile insurance case, an independent investigator has concluded.

In a rebuttal and memo released Thursday with the investigation report, her lawyers accused the investigator of cherry-picking facts in an error-filled effort to wrongly castigate a judge who stood up for “judicial independence.”

For example, her lawyers said, the investigator concluded that Petersen should have told lawyers in a case before her involving Seattle Children’s hospital that her husband had been a medical resident there. But that was over three decades ago, they noted, and he had no current financial interest in the hospital.

Petersen’s case stems from a report she filed with the State Auditor’s Office alleging she was being pressured by her supervisor in the insurance commissioner’s office to decide cases in a certain way. The investigators contended that she was misleading and not forthcoming when asked if she’d emailed a copy of that complaint to Michael Madden, a lawyer in the Children’s case — an improper communication.

But her lawyers, who include Phil Talmadge, a former state Supreme Court justice, said Petersen wasn’t aware she had made a mistake, not recognizing Madden’s name as one involved in the case before her. So, the lawyers said, she was truthful when she originally denied having sent the copy. She said she thought she was contacting an employment lawyer to possibly represent her in her work situation.

Petersen’s allegations and her contact of Madden quickly became more than a simple employment issue because the case she was hearing involved an important question: Was the Office of the Insurance Commissioner right to accept insurance plans sold under the Affordable Care Act that did not include a provider with unique services — in this case, Seattle Children’s.

In a statement Thursday, Insurance Commissioner Mike Kreider said: “I believe the report supports the actions I took to protect the integrity of the legal proceedings brought before my office and was the most impartial and unbiased way to look into all of the allegations.

“As to the findings about the various allegations … the report speaks for itself.”

In a 14-page rebuttal to the 24-page investigator’s report, Petersen’s lawyers took issue with the investigator’s conclusions about Petersen’s email to Madden.

She had no motive in sending the report to Madden, her lawyers noted, because Madden already had received substantially the same information in a legal notice Petersen had previously filed.

That notice said she believed she had been subject to improper pressure by her supervisor, Deputy Insurance Commissioner Jim Odiorne, on cases.

Odiorne said he was not pressuring her, but acting correctly as her supervisor. In an unusual “interim evaluation,” he found fault with her office hours, the way she wrote cases, and other issues.

A day after she filed the notice alleging improper pressure by Odiorne, Kreidler put Petersen on leave.

Petersen has been an administrative-law judge in the Office of the Insurance Commissioner (OIC) for 28 years.

The investigator, Patrick Pearce of Ogden Murphy Wallace, a Seattle law firm, said it was clear Petersen and Odiorne had very different views on what constituted prohibited ex parte contact.

“Witnesses were consistent that Ms. Petersen took a very strict view of prohibitions on ex parte contact with OIC personnel,” Pearce wrote.

“The facts indicate that Mr. Odiorne did not intentionally attempt to discuss pending case issues or how they should be determined with Ms. Petersen,” Pearce continued. He found that Odiorne’s actions “did not constitute improper ex parte communication,” Pearce wrote.

The investigator came to no conclusion about whether Petersen’s email to Madden was “an effort to obtain personal gain,” but said her actions did result in a loss of confidence in Petersen’s judicial role by the parties in the Children’s case. That case continues under a contract judge hired by the OIC.